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Business News/ Markets / Stock Markets/  NSE to implement one paisa tick size for stocks under 250 from June 10, aiming to improve price discovery
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NSE to implement one paisa tick size for stocks under ₹250 from June 10, aiming to improve price discovery

The National Stock Exchange (NSE) will introduce a one paisa tick size for stocks priced below ₹250 per share, effective June 10, 2024. This change aims to enhance price discovery and reflects the intense competition with the Bombay Stock Exchange (BSE).

NSE will introduce one paisa tick size for stocks under ₹250 from June 10, aiming to enhance price discovery and trading efficiency.Premium
NSE will introduce one paisa tick size for stocks under 250 from June 10, aiming to enhance price discovery and trading efficiency.

The National Stock Exchange (NSE) has announced a significant change in its trading parameters. Effective June 10, 2024, the NSE will introduce a one paisa tick size for all stocks priced below 250 per share. This decision is detailed in a circular dated May 24, 2024, and marks a strategic move towards improving price discovery in the market.

According to some market participants, this measure reflects the intense competition between the NSE and the Bombay Stock Exchange (BSE) for market dominance. A tick size represents the minimum price difference between two consecutive bids and offer prices.

The new tick size will apply to all securities, except ETFs, listed under the EQ, BE, BZ, BO, RL, and AF series. Previously, the tick size for these securities was five paise. The tick size for securities under the T+1 settlement will also be applicable for T+0 settlement (series T0), the circular added.

In addition to changes in the Capital Market (CM) segment, the NSE also announced revisions in the Futures & Options (F&O) segment. The tick size for stock futures will now be linked to the underlying price in the CM segment. This change will be reviewed on a monthly basis, using the closing price on the last trading day of the month to determine the tick size for the following month. The revised tick size will apply to all stock futures expiries, including Near-Month, Middle-Month, and Far-Month contracts.

The circular emphasises that there will be no change in the tick size of stock options due to any change in the tick size of the underlying security in the CM segment and its corresponding stock futures.

The NSE circular stated, “Trading members may note that the applicable tick size for trading for securities will be available in the contract/spread master files."

This adjustment is aimed at enhancing trading efficiency and accuracy in price quotations. The decision to align tick sizes with the underlying securities in the CM segment and apply these changes to stock futures reflects the NSE's commitment to maintaining a competitive and efficient trading environment, as per the circular.

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Published: 27 May 2024, 11:13 AM IST
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